House or Gold/Silver?

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economics4me's picture
economics4me
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Joined: Sep 22 2010
Posts: 2
House or Gold/Silver?

I have a nagging question......I am just getting out of ALL my debt (credit cards, auto loans).  I will have absolutely NO debt in 2 months and will come into about $2500/month of cash!  When most people are losing jobs and homes, I am sitting in the perfect position to buy and invest. It has taken me a long time, but I've finally done it.  (I'm 35). 

My big delema is now........should I put that $2500 towards a down payment on a home, most likely ready to buy in 1 year, OR should I invest that money in physical gold or silver and ride the bull market in precious metals?

Any help on this matter would be greatly appreciated.......real estate downpayment or gold/silver investing?

SailAway's picture
SailAway
Status: Gold Member (Offline)
Joined: Aug 11 2010
Posts: 404
Re: House or Gold/Silver?

 

Buying a home, this is the way I look at it:

Up side:

- Interrest rate are very low.

- If there is inflation and you have a fix rate then paying your mortgage would get easier over time.

- You can probably find a good deal in the current market

- You can prepare youself and your home to be "self sustainable"

 

Down side:

- The risk of another real estate crash is high, the chance that prices increase significantly is low (I think).

- You put yourself financely at risk if you lose your job. In this economy the risk is significant  (for myself at least).

- Selling a house is difficult these days so at 35 you are somehow losing your freedom to move and to be reactive in a very changing world...

 

 

Woodman's picture
Woodman
Status: Diamond Member (Offline)
Joined: Sep 26 2008
Posts: 1028
Re: House or Gold/Silver?

I don't see a house or gold/silver as investments, unless one can risk being a speculator.

Current low interest rates and reduced housing prices make this a relatively good time to buy a house, but buy house because you want to keep and live in it not sell it.  And if you are keeping it you don't care much if prices drop some in the future.

If there is inflation, paying your fixed rate mortgage is only easier if wages rise with inflation.  Otherwise, rising prices of other items you need to buy like food ang gas will result in less income left to pay your mortgage.

Buy gold/silver if you want to help preserve the value of your wealth and sell it many years from now only when you want to use that wealth for something else.  Or sell if the government decides to become fiscally responsible, but I don't see that happening anytime soon. 

That's great for you to be getting out of debt.  Establish a liquid emergency fund first before any investments or house, in case you lose your job as the above poster noted. 

docmims's picture
docmims
Status: Platinum Member (Offline)
Joined: Jun 17 2009
Posts: 644
Re: House or Gold/Silver?
SailAway wrote:

- You put yourself financely at risk if you lose your job. In this economy the risk is significant  (for myself at least).

Other than this your points are fine.  Actually you are safer from job loss if you own the house.  It takes years to evict a stuborn homeowner.   If you are renting: both you and your belongings can be forceably out on the curb after you miss one rent payment.

just my 3c

Woodman's picture
Woodman
Status: Diamond Member (Offline)
Joined: Sep 26 2008
Posts: 1028
Re: House or Gold/Silver?

Housing Crash Continues -- It's Still A Terrible Time To Buy

http://patrick.net/housing/crash.html

 

 

economics4me's picture
economics4me
Status: Member (Offline)
Joined: Sep 22 2010
Posts: 2
Re: House or Gold/Silver?

Thanks for the advice!  Great stuff in here.  I think you are right. Both housing and gold are not really "investments" if  #1) I plan to buy this house and live in it (like my parent's generation- which I plan to do.  I am not some real estate flipper, or investment type.  Right now i'm concerned about the economy and where it is headed in the next 10-30 years.  I want to be "self-sustaining", as someone mentioned above.  Thankfully I was born and raised on a farm, so I can grow my own food in my back yard if I needed to. :).........as for #2) Gold - simply a hedge again inflation - I understand this.  Maybe I'll just take $500 of my $2500/month and invest in silver and put the other $2000 in a money market account for savings (just in case I lose my job). 

Maybe I'll get lucky and the housing market will keep coming down a little. I know that sounds bad, but I will am on the other side of the coin - I will have a little bit of money to invest and no debt.  I feel the sky is the limit. I am finally free and can't wait to start investing my money.  I just want to make sure I'm doing it correctly.

Thanks again for the advice! 

Montana Native's picture
Montana Native
Status: Silver Member (Offline)
Joined: Mar 17 2009
Posts: 166
Re: House or Gold/Silver?

On a side note......a few palladium coins may not be a bad idea.

I think a house to prepare for a future of less and a base in precious metals are both very wise decisions. I think Gold will perform quite well moving forward whether the path is inflation/deflation. The real story for Gold is the path of the future appears dark, foggy and creepy. Silver just looks like Gravy with world wide currency wars heating up. I am a year older than you and just went through your delimma. I chose an initial solid base in metal which has been quite nice, waited on a forclosure with timber/fruit/and pasture. I'm personally preparing for inflation so this year my focus is on accumulating things.....wood stoves in house/garage, canning supplies ammunition, lamp fuel,board lumber, hand tools.....etc.

I'm not sure how secure you feel your job is, but I know I sleep real good knowing the things i'm accumulating are real and not paper games. Just my 2 cents.

Rojelio's picture
Rojelio
Status: Bronze Member (Offline)
Joined: Dec 27 2010
Posts: 38
Re: House or Gold/Silver?

If you choose to purchase a house, get one in a safe area with good neighbors and a hand-pumped well that gives you potable water. It should also have enough of a yard with good soil to plant a ton of vegetables. If you can't do this in your area, then rent the cheapest dump you can stand and obsessively stack silver. There are quite a few seemingly credible people saying that at the bottom of the housing market whenever we get there, you'll  likely be able to purchase a house for 500 ounces of silver.

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